WHY PURCHASING A PERSONAL UMBRELLA POLICY IS A WISE DECISION

One of the most important insurance policies you can buy is the personal umbrella policy, but many people are unaware they need one. This policy provides high limits of liability to protect you against a catastrophic liability loss. It pays after your homeowners or personal auto policies’ limits have been exhausted. For example, a major car accident in which you severely injure sev-eral persons can result in damages easily exceeding your personal auto policy’s liability limits. Losses that result in injuries to numerous people, head injuries, and death are often covered by a personal umbrella policy. In addition to providing higher limits, this policy normally pays for some losses not covered by the underlying policy, such as legitimate allegations concerning libel or slander.

Personal umbrella policies are growing in popularity. In the past, only wealthy individuals and families purchased this coverage. Today, middle-income families also may procure this policy for protection in our society’s increasingly litigious climate. As the tendency to sue for damages rises and awards granted by the courts grow, the personal umbrella policy is increasingly seen as an insurance necessity, rather than a luxury. It is especially attractive because of its relatively low cost.

In particular, you should consider purchasing a personal umbrella policy if you have certain
characteristics or engage in certain activities, including the following.

• Your total assets are greater than your underlying liability limits.
• You are financially responsible for the actions of a young, inexperienced driver.
• You live in an exclusive and affluent neighborhood.
• You have a high profile career or high income.
• You frequently host guests on your property.
• Your residence includes a swimming pool.
• You own waterfront property, a farm, or a ranch.
• You own watercraft or aircraft.
• You own numerous rental properties.
• You engage in extensive international travel for pleasure.

AVOIDING CONSTRUCTION DEFECTS THAT CAN DESTROY YOUR HOME

I have a friend who lives in a five year old manufactured home. About a month ago, He called me during a rainstorm because he couldn’t get his breaker box to quit tripping and cutting the power to half of his home. I thought he might be overloading the circuit, so we unplugged everything; but the breaker still tripped. I walked outside and saw an outdoor outlet on the side of the home. Making sure that the breaker was switched to the off position; I opened up the outlet and discovered that it was full of water. The weather seal had failed and the outlet was shorting out because of the heavy rain collecting inside. We didn’t have a replacement outlet at the time, so I capped the end of each wire with wire nuts and wrapped them in electrical tape.

My friend called me yesterday evening to help him install the replacement outdoor outlet at his home. In the process I noticed that the work box that housed the electrical socket was stripped where the screws went in to hold the new outlet securely to the home. I removed the work box and found a scary problem. The original installer of the work box didn’t ensure that other wiring was out of the way and the metal wings that hold the work box secure against the home had nicked the insulated housing of another wire when it was installed. Over the past five years, that nick just sat there. However, during the rain storm, when water entered the housing, the water must have entered the housing of the wire, causing it to short out and much of the insulation on the housing melted and burned away. No doubt, this time bomb was just waiting to burn down their home.

Thank heavens the original work box had been stripped, otherwise this problem would probably not have been caught in time.

Since this was a manufactured home, my friend was very detatched from the construction process of his home and unable to do anything to prevent this type of occurrence. However, there are steps that can be taken to avoid poor workmanship in the future.

• If you don't know how to conduct a repair or a new additon, do not perform the work yourself. Hire a professional contractor.
• Conduct a background check on any contractor you hire. Ask them for names of clients they've done similar work for in the past and then call those clients to see how they feel about the work that was performed. You may also wish to ask your contractor for a resume.
• Ask contractors for their credentials. Having special training or certifications that qualify them for the work that is to be performed generally results in a better outcome.
• Watch the work that as it is being done and feel free to ask questions. While this may not make you their best friend, contractors are less likely to take shortcuts when they are being observed.
• Hire a qualified inspector after the project has been completed to certify that it was done correctly. It is preferable to have the inspection done before you pay the contractor.

Remember that contractors are human and no matter how careful they are, defects can still occur. Additional steps can be taken now to help you in case you later experience trouble due to a construction defect.

• Ask the contractor for their license and verify that they are the qualifier on the license. Ask if any complaints have ever been filed against them.
• Verify that they are bonded for at least the value of the work they will be performing. While a performance bond won't pay for faulty workmanship, it can pay if the contractor leaves before the work is completed or if they fail to pay their suppliers. It is also a token that they are a respectable contractor, since bond companies don't typically issue bonds to contractors they don't trust.
• Ask the contractor to name you as additional insured on their liability insurance policy while they work on your project and obtain a certificate of insurance from their insurance company. Verify that their liability limit per occurrence is no less than $1,000,000.00.
• Verify that the contractor obtains any necessary permits for the work they will be performing.

Another topic worth mentioning is workers' compensation. It is possible that if someone is hurt at your home while performing work for you, the ensuing lawsuit may name you as a defendant. Verify that your contractor has a current workers compensation insurance policy and make sure that everyone who will be performing work is included in the policy. This should even include the general contractor. Obtain verification of this in writing.